This TERMINATION AGREEMENT (this “
Agreement ”) is entered into as of December 31, 2011,
by and between Anworth Mortgage Asset Corporation, a Maryland
corporation (the “ Company ”), and Joseph Lloyd
McAdams (the “ Executive ”). The
above parties are referred to collectively herein as the “
Parties ” and individually as a “ Party
”.

RECITALS

WHEREAS, the Executive and Anworth Mortgage
Advisory Corporation have entered into an employment agreement
dated as of January 1, 2002, which was subsequently assumed by the
Company, and the Company and the Executive have since entered into
a number of addendums to such agreement (as amended to date, the
“ Employment Agreement ”);

WHEREAS, the Company and Anworth Management, LLC
(the “ Manager ”) have entered into a Management
Agreement dated as of December 31, 2011 (the “ Management
Agreement ”), and in connection therewith, the Company is
now externally managed by the Manager, with the Company’s
day-to-day operations conducted by the Manager through the
authority delegated to it under the Management Agreement and
pursuant to the policies established by the Company’s board
of directors (the “ Externalization ”);
and

WHEREAS, in connection with the Externalization,
the Parties desire to terminate the Employment Agreement because
the Company will operate as an ent

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